Renting an Apartment Can Be Difficult For Expats
Now that my own apartment will be used as a vacation rental (it can be seen here) I have to move out. This means trying to find and rent an apartment here in the city. Unfortunately for me, this has not been as easy as you might think. After going through this process, I can see why the furnished apartments offered by ApartmentsBA and many other rental agencies are so popular here with foreigners. Rental agencies just don't make it easy for expats to rent a place.
What You Need to Rent
Just like back in the U.S., to rent an apartment, the owners will require you to show proof of income, evidence of employment, etc. They'll also want something known as a "guarantee". A guarantee is someone who owns a property who is willing to use their property to vouch for you. Usually this is a family member. If you don't pay your rent, the landlord can begin proceedings against the guarantor.
This puts expats in a particularly tricky position. Since they don't have family here, it is very difficult to find someone to give you a guarantee. You'll have to know someone really well, and they will have to trust you completely, because they are literally putting their property on the line for you. When I rented my office for the first time, my local business partner, who I knew for 2 years, was my guarantor.
Now, if you work for an international company, usually the company acts as your guarantor. However, if you are moving here as an individual, you won't have a Fortune 500 company standing behind you. That means finding your own guarantor. In my case, I figured it would be simple. I own property in Buenos Aires, so I can guarantee myself.
Wrong! Apparently you can't serve as your own guarantor. This makes things a bit more complicated. So, I'm back in the same boat as all the other expats here who don't own property -- searching for someone to provide me with a guarantee. Luckily, I do have someone who can do this, so that problem is solved.
So, assuming everything goes OK and there's no paperwork issues, I'll be able to rent the place. What a hassle, though. The first place I was going to rent turned me down flat out. I even offered to pay them a year's rent up front and they still wouldn't rent it to me. It seems some owners just don't want to deal with foreigners at all -- even if they do have all their paperwork in order.
If you're here without a DNI, it'll probably be next to impossible for you to rent a place. And if you don't have someone to be your guarantor, you're probably out of luck as well. After going through this experience, it is obvious why so many foreigners just rent the short term apartments. It's a whole lot easier than having to go through all this rigamarole trying to rent long-term.
Note to readers: I think someone could make a good business here providing guarantees to foreigners renting here. If you're someone who has a background in evaluating someone's credit risk, it could be a good opportunity.
Labels: Business, Transition Phase
posted by SoyYo at 2/11/2006 07:41:00 PM
7 Comments:
We have now rented several properties long-term (2 years or more)and Expatriado is right, it is a hassle, but its not impossible to rent if you are down here on your own.
The guarantor is the most orthodox way of getting a lease. It is the way they have been doing rentals down here since the various crisis. It is what most landlords are comfortable with when renting to anyone, not just foreigners, Argentines need them too. It should be said though that getting a guarantor for a lease is like getting your parents to co-sign for a auto loan or credit card...it is not a big deal and we had many aquaintances willing to do it for us.
The first time we rented we did find a landlord willing to rent to us with the first year up front and the rest of the standard two year lease in quarterly payments..so that can be done as well.
There are "firms" that will guarantor you using their properties, however this is expensive and often not acceptable to your landlord. First choice is privately owned residental property.
An aside: I know Expatriado is a big fan of the DNI, however,we did rent a house, buy a car, open a bank account and get health insurance without a DNI. We did get them as we intended to stay here awhile, but the only real tangible advantage is the discount for travel in Argentina. So while you may want it longterm, not having it when you hit the ground will not necessary impede your ability to begin getting things in order here.
El Expatriado,
You are DEFINITELY right on target as usual. It can be VERY frustrating. That is one of the reasons why my company has is so popular with not only tourists but a growing number of my business is corporate (about 30% now). In fact, I'm getting more and more requests for longer-term but honestly I'm not really interested in it as the short-term business is so much better. Still, we've been doing longer term leases for corporations and Embassies.
You are correct when you mentioned the process of renting. I own many properties here in Buenos Aires yet I don't live in any of them. Why? Because I can make much more money renting them out and then taking the rental income and living in an even better place that is much bigger and fancier. Case in point, I live on Ave. Alvear on one of the most expensive sections in town.
Yes, my rent is sky high for a local and priced in u$s dollars but it's still lower than what I get renting out one of my ultra luxury places so it doesn't make sense to live in a luxury apartment as you can make much more income as you figured out.
Everything you said is true. You can NOT serve as your own guarantor. Listen to how silly this rule is. My net worth I'm positive is much higher than the owner of my apartment on Ave. Alvear. I own several apartments free and clear in Recoleta. Yet they still wouldn't let me be my own guarantor. I even offered them to use two of my properties as a guarantee and they still said NO.
I know it's more difficult as I'm leasing out a u$s 400,000 apartment and the building is really amazing but still. I had to end up getting a guarantor for my two year lease. I offered to pay the entire two year lease upfront. I'm talking about u$s 33,600 upfront and they still required a guarantor. All this for an unfurnished apartment. Oh well.
It was funny when the owner of the apartment came to my office to sign the lease last year. Once he figured out that I had no money problems he was more at ease but I was still pissed I had to jump through all these hoops. I still ended up paying one year in advance to get the rent SLIGHTLY reduced.
Rent prices are going up quickly. Not just for forigners either. For the locals as well. I've looked in my building and I'm sure glad I have my lease locked in another 1.5 years as I'm almost sure prices will be much higher than when I started.
This is only one example in the really crazy system of real estate here. Everyone assumes if you have a lot of money things will be easy but that just isn't the case here. What made me even more frustrated is I knew the realtor that leased the apartment I leased. I bought a few million u$s last year in real estate from their firm and they knew I bought several million u$s more with other firms and they still couldn't convince the owner I wasn't a risk.
You have to consider why they are so strict. The laws here are VERY pro tenant. Basically, you can stop paying rent, destroy the place and they must take you to court to get you out. The process can take up to 2 years. This is the reason why it's so difficult. Behind every problem is usually another problem. Instead of fixing the underlying problem they make it more difficult.
It's for this reason I refuse to rent out to locals. I only rent out to Americans, UK and Europeans for the most part. Never anyone from Argentina.
El Expatriado - I think you mentioned you already have a girlfriend but trust me....once the girls here find out you own property....everyone hits you up to be their guarantor. You know I own a few properties. I know you are on your 2nd. I get hit up at least on a weekly basis from people I know that want me to be a guarantor. Just make sure the person you are doing it for is special as you can only use that property one time.
Good luck all.
Mike
I'm not saying it's impossible. Keep in mind I got involved in this business owning/managing apartments by accident. I first came to BA during the crash at the beginning of 2002. I kept coming down and got tired of staying in expensive hotels. I tried using other companies and just got scammed so I went out and leased a high end luxury apartment. (This was with OUT a guarantor). I even negotiated to sublet it when I wasn't using it. That is how I got the idea to do what I'm doing.
After that first lease I went out and leased 4 more apartments all with OUT a guarantor so it IS possible. You will find on higher end properties it's more difficult to get without a guarantor but it's still possible.
However, it's just about impossible to rent OFFICE/commericial space without a guarantor. I leased a high end office in Recoleta and I couldn't use my own properties for this lease either. I had to get a guarantor for this office as well.
There is a way around most things but I think the point El Expatriado and I were making is that it's difficult and the system is flawed here.
You will find that many locals prefer renting to foreigners (Americans) vs. a local without a guarantor. Many foreigners pay the entire lease upfront. I did that on all my leases in the beginning to avoid the guarantor issue. I remember my first lease in BA. It was u$s 25,000 for two years...ouch....
Oh yeah, something that I forgot to mention is that once you lease without a guarantor and have a track record it's easier and easier to rent without having one. Again, this is lower on not so expensive properties. I've found on apartments valued over u$s 250,000 or more it's almost impossible to lease without a guarantor but even today I lease and sublet 4 apartments from locals with the written agreement that I can sublet them out. None of them are super expensive properties.
I've been leasing properties since 2002, never damaged any and can show them my lease contracts and give references so that helps. It still didn't help me leasing my apartment now but if I renew I'm sure that the owner won't require a guarantor again.
Although there is no real credit system here, having a past history of good rentals can really help. Also, something that El Expatriado can probably attest to is that once the locals find out you actually live here full-time and not a tourist they can be more accepting and easier to deal with.
Yesterday I did something that I never did before. I was the "guarantor" for a friend so she could rent her very first apartment ever. She has been living with her parents all her life. She comes from a prominent family, makes a good salary, educated, has money in the bank but they still made her get a guarantor.
Her parents were against the idea of her moving out on her own (even though she is 26 years old). I supported her decision. Her own boyfriend although he owns properties couldn't serve as her guarantor because he was already a guarantor on someone else and they won't let you serve as 2 with the same property.
I was very shocked with the process and just how long it takes. I was sitting there going over a contract that was almost twice as long as an "escritura" or title deed transfer for BUYING a property. There were clauses in there that if she for any reason didn't pay the rent, if she died, etc. that I would be liable. And if I didn't pay I could not sell my property as there would be a lien against it.
Now I see why it's a bit tough to get a guarantor. You are putting a lot of faith in that other person for two years. Even if you trust them, you have to keep unforeseen things in mind like if they got sick or died you are the one that needs to pay for that entire 2 year lease.
It took a long time and as I've mentioned, I've purchased apartments worth hundreds of thousands of dollars, read the contract and watched them count the cash in less time then it took to sign this contract for a 500 pesos ($164) per month apartment.
Oh well...many things in this country are backwards.....
Dear Apartmentsba, there are many "backward" things in the US as well. The US "healtcare system" is plain horrible. If Argentinians were like Americans they would tell you to "love it or leave it".
It's true that being a guarantor is difficult, but so is being a landlord. Much like with a credit card, it's important that people establish a history - and unlike with a credit card, you cannot simply cancel it and move on. It's important that everyone feels secure in their living arrangements - both the renter and the property owner/manager.
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